Higher tax slams the brakes on Vietnam's car imports

Motorcycles and cars stop on a street in Hanoi, Vietnam June 30, 2016. Picture taken June 30, 2016. Photo by Reuters/Kham

Duties of up to 150 percent are making people think twice about life in the fast lane.

Vietnam imported around 8,500 cars in August, a drop of 21.1 percent against July, according to data from the General Department of Customs.

Import value also decreased by 11.3 percent to hit $184 million.

This leaves Vietnam’s total car imports at nearly 69,000 units over the first eight months of 2016, down 8.1 percent in volume and 16.5 percent in value.

Car traders attributed the drop in August’s car imports to adjustments to special consumption tax duties.

Specifically, tax rates on large engine cars (above 2,500cc) used to range from 50-60 percent, but in July this year, those rates were increased by 30-90 percent so some models incur a 150 percent levy.

In addition, many consumers avoided purchasing new items in August as the month coincides with the seventh month of the lunar calendar, known in Vietnam as the Month of Forsaken Spirits, while others decided to save their money for new models that will be launched by major car manufactures in October.

Data from the Vietnam Automobile Manufacturers Association showed that August’s car sales fell by 16 percent against July to just over 23,500 units, of which passenger cars dropped by 14 percent, commercial cars were down by 22 percent and special-purpose vehicles fell by 17 percent.

As well as the increased special consumption tax, the Vietnamese government is trying to curb automobile imports by adding an extra duty on second-hand cars from $1,500-$2,000 from the start of September.